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Tax
1. Amendment to Specifically Selected Goods and Services Tax Act
On January 7, 2015, the President announced the third amendments to the Specifically Selected Goods and Services Tax Act. We summarize below:
(1) Any non-urban land for which a construction permit may legally be issued shall be included in the levied scope of the specifically selected goods and services tax.
(2) For changing the self-occupation building, the conditions for exemption from the specifically selected goods and services tax are amended. When an owner and owner's spouse and lineal relatives of minor age have only one unit of a building and the land associated with the unit; have completed household registration and during the holding period neither provide it for business use nor lease it out, exemption from the specifically selected goods and services tax may be applicable when self-occupation is proved.
(3) The Ministry of Finance will be authorized to approve exemption from the specifically selected goods and services tax for short-term speculative transactions.
Reported by: Stacy Lo/ Mark Chen
Criminal Procedure
2. Amendment to "Code of Criminal Procedure"
On 24 December 2014 the President announced the amendment of Item 7 of Article 376 of the Code of Criminal Procedure. This provides that offenses involving stolen goods specified in Paragraph 2 of Article 349 of the Criminal Code are not appealable to the court of the third instance.
Reported by: Kang-Shen Liu / Angela Chang
Labor
3. Explaining Paragraph 6 of Article 58 of Labor Insurance Act
On November 9, 2014 the Ministry of Labor issued an order explaining Paragraph 6 of Article 58 of the Labor Insurance Act. If workers receiving old-age benefits through social insurance re-engage in work, the insured units may only apply for occupational accident insurance for them.
Reported by: David Tsai / Robin Huang
Financial Holding Company
4. Draft amendments to "Rules Concerning Cross-Selling by Financial Holding Company Subsidiaries"
The Financial Supervisory Commission ("FSC") issued a press release proposing draft amendments to the "Rules Concerning Cross-Selling by Financial Holding Company Subsidiaries" ("Draft Amendments") on December 16, 2014. We summarize below:
(1) To be in line with the amendments to the "Financial Holding Company Act", the Draft Amendments specify that without written consent by relevant customers, the information disclosed, transferred, or cross-utilized by financial institutions shall not contain customers' information other than their names and addresses.
(2) The Draft Amendments specify that contracts between financial institutions and customers shall have provision for customers to decide whether they are willing to provide information other than their names and addresses for marketing purposes and the customers shall sign on such provision. Concerning contracts that list the names of subsidiaries to utilize the information, to provide flexibility to financial institutions when implementing such requirements, the Draft Amendments delete the wording "for customers to choose" but request that a public announcement shall be made on the websites of the financial holding company and its subsidiaries whenever an increase or decrease of the subsidiaries results from reorganization of the company.
(3) Once a subsidiary of a financial holding company is informed by customers to stop using their information, all the subsidiaries must stop using such information. However, the Draft Amendments specify that if customers clearly instruct that only some of the subsidiaries stop using such information, financial institutions may follow such instructions.
Reported by: Stacy Lo/ Angela Lin
Banks
5. Administration punishments on a foreign bank
According to a press release the FSC, a foreign bank's Taipei Branch ("Branch") breaches Articles 45-1, 61-1, and 123 and was imposed with a NT$12 million administration fine and two orders for corrections. The Branch was also prohibited from applying for any new business in one year and ordered to review duty of derelict officers and establish full-time internal auditing officers.
(1) From 2011 to May 2014, the Branch consistently provided business premises and equipment to assist personnel of its Hong Kong affiliate, which is not permitted to be established in Taiwan, to sell foreign financial products in Taiwan. The FSC holds that the Branch did not fully implement its internal control system and thus breached FSC rulings.
(2) From 2010 to 2011, the Branch hired staff on behalf of its affiliate, which is under preparatory; as a result, the profits of the Branch decreased by NT$47 million. The FSC holds that the Branch did not establish an appropriate and effective internal control system for the accounting process and ways of reimbursement of advance payments between group's affiliates. Consequently the Branch's advance payments have not be reimbursed and its financial information is not authentic.
(3) The information and consulting services of foreign financial products provided by the Branch were beyond the scope that it was allowed to provide. The Branch also provided telecommunication equipment to its affiliate and charged for usage of such equipment from November 2011 without reviewing the legality of such an arrangement. The FSC holds that the compliance system of the Branch was not careful enough and may affect its sound operation.
Reported by: Stacy Lo/ Angela Lin
SITE/SICE
6. Relaxation of Businesses related to Unapproved Offshore Funds Provided by Securities Investment Trust Enterprises (SITEs) and Securities Investment Consulting Enterprises (SICEs)
On December 17, 2014, the Securities Investment Trust and Consulting Association forwarded the ruling issued by the FSC on December 12, 2014 (Ref. No.: Jin-Guan-Zheng-Tou-Zi-1030045271) to relax the business content and scope related to unapproved offshore funds provided by SICEs and SITEs.
(1) A SICE/SITE meeting the qualifications of a master agent, may seek the FSC's approval for the following business:
a. To accept mandate from an offshore asset management institution to sell and provide advice on fund products that are not securities investment trust funds to professional investors in Taiwan, provided that no New Taiwan Dollars exchange activities shall be involved.
b. To accept mandate from an offshore asset management institution, in connection with its products and subject to no involvement in Offshore Banking Unit (OBU) or Offshore Securities Unit (OSU) clients or New Taiwan Dollar exchange activities:
(i) To initiate contact with the OBU/OSU and provide relevant fund sales strategy, promotion, explanation, assistance in listing products and internal training, according to the product content, market trend/need and OBU's/OSU's business needs;
(ii) To initiate contact and introduce offshore financial asset management institutions to OBU/OSUs and accompany the representatives of such institutions to visit, have a physical or video conference, and hold seminars with such offshore asset management institutions to provide market trend advice, investment strategy or product introduction to OBU/OSUs
(iii) To assist in administrative related matters to accept, process and check trade orders of relevant funds by OBU/OSUs; and
(iv) To proactively provide fund information, internal training and advisory service after a product listing, according to the need of the offshore asset management institution and OBU/OSU.
(2) The above-mentioned new businesses will be subject to the prior approval of the FSC. In addition, no general advertisement or public offering or solicitation can be made when a SICE/SITE engage in the above business.
Reported by: Jeffrey Liu / Judy Tai
Securities Firms
7. Amendments to Standards Governing Establishment of Securities Firms
On December 22, 2014, the FSC issued a ruling (Ref. No.: Jin-Guan-Zheng-Quan-Zi-1030049348) to amend Articles 14 and 25-2 of "Standards Governing the Establishment of Securities Firms" ("Standards"). We summarize below:
(1) To add an exception clause to the concurrent operation of a financial institution in the securities businesses. Thus, a financial institution may concurrently operate securities businesses other than those listed in Article 14 of the Standards by obtaining ad hoc approval from the FSC.
(2) To add an exception clause to the requirement of the capital adequacy ratio for establishing an overseas branch office by a securities firm: The requirement which the capital adequacy ratio shall be no less than 200 percent may be exempted by obtaining ad hoc approval from the FSC.
Reported by: Jeffrey Liu / Judy Tai
8. Draft Amendment to'' Regulations Governing Securities Firms''
On December 26, 2014, the FSC issued a ruling (Ref. No . Jin-Guan-Yin- Quan -Zi- 1030052677) to announce the draft amendments of '' Regulations Governing Securities Firms''. The major amendments are listed below:
(1) To specify securities firms shall not solicit businesses for unreasonable fees/charges.
(2) To reduce the required operation bonds for branch offices to NT$5 million.
(3) To provide that where approved by the FSC, funds a securities firm lends to others or uses for other purposes can be for purposes other than business operation.
(4) To relax restrictions on holding of securities issued by foreign companies.
(5) To require relevant payments/receptions securities firms made for proprietary trading of securities dominated in foreign currencies be done through accounts for foreign deposits.
(6) To specify that scopes of derivatives that can be traded between securities firms and investors shall refer to the stipulations of the GreTai Securities Market.
(7) To relax restrictions on securities firms' underwriting businesses.
(8) To add relevant requirements for securities firms to keep client's settlement funds in the securities firms' settlement accounts after obtaining clients' consent.
(9) To provide that certain financial requirements can be exempted with the FSC's ad hoc approval.
Reported by: Jeffrey Liu / Caitlyn Kao
Finance
9. Digital financial environment 3.0
The FSC issued press releases on December 25, 2014 to explain that they are promoting the policy of digital financial environment 3.0. In conjunction with this policy they announced the draft amendment to the Regulations Governing the Scope of Business, Restrictions on Transfer of Beneficiary Rights, Risk Disclosure, Marketing, and Conclusion of Contract by Trust Enterprises ("Regulations"). We summarize below:
(1) Any written document mentioned in these Regulations may be in electronic documents in accordance with the Electronic Signatures Act.
(2) When trust enterprises handle the KYC's operation, the relevant information and analysis results may be confirmed through the execution of original seal by a customer or by other means agreed by both parties.
(3) Trust enterprises may inform customers of the important content of notices regarding domestic structured products and the track of operational process for non-professional investors may be retained by electronic equipment.
In addition, in order to promote the policy of Bank 3.0, the FSC will in principle adopt the mode of multiple identity authentication and carry out the application document and trading instruction by electronic means as far as possible. Therefore, the FSC announced the increase of 8 items under relevant financial laws and regulations for which the electronic documents under the Electronic Signatures Act apply.
Reported by: Stacy Lo/ Mark Chen
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2015-01-08
